The audit of Barns Company and its subsidiaries for the year ended December 31, 2012, is completed. The working papers contain the following information:
a. Barns Company acquires 4,000 shares of Webo Company common stock for $320,000 on January 1, 2011. Webo Company purchases 500 shares of its own stock from NCI shareholders as treasury shares for $48,000 on January 1, 2012.
b. Barns Company acquires all 8,000 outstanding shares of Elcam Company stock on January 1, 2011, for $600,000. On January 1, 2012, Elcam Company issues through a private sale 2,000 additional shares to new non-controlling shareholders at $85 per share. Barns have no investments other than the stock of Webo and Elcam.
c. Elcam Company originally issues $200,000 of 10-year, 8% mortgage bonds at 98, due on January 1, 2015. On January 1, 2012, Webo Company purchases $150,000 of these bonds in the open market at 98. Interest on the bonds is paid each June 30 and December 31.
d. Condensed balance sheets of Webo and Elcam on January 1, 2011, and January 1, 2012, are as follows:
e. Total dividends declared and paid during 2012 are as follows:
Barns Company .......... $24,000
Webo Company .......... 22,500
Elcam Company .......... 10,000
f. On June 30, 2012, Barns sells equipment with a book value of $8,000 to Webo for $10,000. Webo depreciates equipment by the straight-line method based on a 10-year life.
g. Barns Company consistently sells to its subsidiaries at prices that realize a gross profit of 25% on sales. Webo and Elcam companies sell to each other and to Barns Company at cost. Prior to 2012, intercompany sales are negligible, but the following sales are made during 2012:
h. At December 31, 2012:
Barns Company owes Webo Company ...... $24,000
Webo Company owes Elcam Company ...... 16,000
Elcam Company owes Barns Company ...... 12,000
Total ................... $52,000
i. The following trial balances as of December 31, 2012, are prepared:
Prepare the worksheet necessary to produce the consolidated financial statements of Barns Company and its subsidiaries for the year ended December 31, 2012. Include the determination and distribution of excess and income distribution schedules. Any excess of cost over book value is attributable to goodwill. All bond discounts are assumed to be amortized on a straight-line basis.

  • CreatedApril 13, 2015
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